Denham Sadler
March 29, 2017

IP changes an act of ‘cowardice’

Copyright

IP changes an act of ‘cowardice’

Martin Hosking: Threatening to take Redbubble offshore as a result of changes

The government’s 'cowardice' on copyright reform will damage local tech companies and is indicative of its failure to live up to its innovation rhetoric, Labor has argued in Parliament.

The government introduced the Copyright Amendment (Disability Access and Other Measures) bill to the lower house last week, but the last minute removal of a large expansion to the safe harbour provision has angered much of Australia’s tech community.

Several startup and tech industry leaders have spoken out on the issue, with Redbubble’s high-profile founder Martin Hosking threatening to move his company overseas because of the country’s copyright policies.

A safe harbour scheme gives legal protection to a platform that is hosting copyright infringing content if it is removed quickly after they are notified. Australia’s current safe harbour rules only apply to telcos and internet providers.

A first draft of the government’s bill included the expansion of this exemption to include online platforms, search engines and universities, but this was removed after extensive lobbying by copyright owners and entertainment companies, who argued such a clause would be damaging to Australia’s creative industries.

The groups argued that a review should be undertaken before any changes are made, and that such a scheme could damage local innovation.

After the bill was introduced to Parliament, Communications Minister Mitch Fifield confirmed the safe harbour extension had been taken out following this feedback.

Shadow Minister for the Digital Economy Ed Husic told the Parliament on Tuesday night of the government’s “cowardice” over removing the safe harbour expansion.

“An inability to have an effective safe harbour regime in this country means that jobs are on the line. Businesses are on the line,” Mr Husc said.

“We are looking at a government that championed itself as being the innovation government, the one that would see all these new firms sprout up, particularly in the tech space.

“These firms are now actively looking to go overseas because this bill was unable to work out a way to allow those firms to continue in this country,” Mr Husic said.

In response, Infrastructure Minister Paul Fletcher said the safe harbour changes have been put on hold while the government consults further with the relevant stakeholders.

“I want to make it very clear that we are not talking about holding a further review or a further inquiry. What we are going to do is further consider feedback from stakeholders on this issue,” Mr Fletcher said.

Mr Fletcher also attacked the Opposition for not moving an amendment on the issue.

“When the member for Chifley was waxing lyrical at the dispatch box, did he move an amendment? He did not. He did not offer a solution. He was content to criticise,” Mr Fletcher said.

The failure to expand safe harbour provisions has been slammed by $140 million local tech firm Redbubble, with Mr Hosking saying he may be forced to relocate his company overseas.

“For us the threat is very real. If Australia ends up with the worst laws around digital content in the OECD, the risk for any company dependent on user-generated content is real,” Mr Hosking told InnovationAus.com.

“The real danger is around frivolous lawsuits, and that creates a situation where Redbubble or any company like us couldn’t exist in Australia. It’s not viable to have an economy based on digital creative content under laws which simply don’t deal with it.”

Redbubble was founded in Melbourne in 2006, and without safe harbour protection has grown into an ASX-listed firm now worth nearly $140 million. The company has encountered several legal problems though, with the Hells Angels and Nintendo taking legal action over copyright infringing material posted on Redbubble.

Australia’s tech advocacy group StartupAus also criticised the removal of a safe harbour scheme, with chief executive Alex McCauley saying it leaves local tech companies open to legal action.

“Platform businesses hosting content are going to be exposed to legal action here when they wouldn’t in other jurisdictions. It’s a real risk for the Australian tech scene if a businesses hosting copyright material are exposed to additional legal risks here, they just won’t start here or stay here,” Mr McCauley told InnovationAus.com.

Redbubble currently employs about 110 people in Australia, and the loss of several tech companies like this would impact the economy, Mr Hosking said.

“High-growth startups have been the single largest source of job creation in Australia for the last five years. This is all at risk if we don’t modernise our laws. We will not have that sort of job creation and potential unless we have laws which deal with digital content properly,” he said.

Mr Hosking said other tech companies would follow Redbubble out of Australia, and founders will choose elsewhere to launch a startup.

“My advice for someone with an idea like Snap, Pinterest or Reddit would be to not launch the company in Australia, but to launch it in Europe or the US - somewhere that recognises that digital content is inherently different than content created elsewhere,” he said.

But APRA AMCOS chief executive Brett Cottle argues expanding the safe harbour exemption would be damaging for Australian creative industries, and that it would “undermine the current commercial framework on which rights holders rely”.

“Are online services floundering in Australia? Are they finding it difficult to launch in this territory without the protection of an expanded safe harbour scheme? Of course not,” Mr Cottle said.

“Australia is consistently one of the first international markets in which any new digital music service decides to launch. Why? Because Australia already has one of the world’s most stable, fair and efficient copyright systems.”.

A joint statement by a group of content industry bodies said the expansion of safe harbour would “make it easier for big tech companies to use Australian content without fair payment and will mean less production of Australian stories”.

“Intellectual property is an economic driver and facilitator of innovation. It enables the development and commercialisation of clever ideas and a return on investment in production, marketing and distribution,” the statement said.

Tech giants like Google have led the campaign in Australia for the safe harbour scheme. DIGI, which includes representatives from Facebook, Google, Microsoft, Twitter and Yahoo, has added to the growing calls to overhaul Australia’s copyright laws.

“Failing to pass the safe harbours provision threatens the innovation engine that drives economic growth by creating unnecessary obstacles for Australians competing in a global digital marketplace,” DIGI managing director Nicole Buskiewicz said in a statement.

The benefits of such a scheme for giants like Google are obvious, and the group is a key financial supporter of StartupAus. But Mr McCauley said the organisation’s lobbying on this issue is solely for the little guys.

“While the safe harbour provisions would apply to the big tech companies, it would be the startups that would benefit from them," Mr McCauley said.

"No-one is suing Google over copyright infringement here – a lot of it isn’t hosted here for this reason and Google is probably the biggest copyright law firm in the world,” he said.

“It’s the Redbubbles and Envatos of the world that are getting sued because they are still emerging businesses. They’re exactly the kind of businesses that need those protections. Google can look after itself.”

This view is backed up by Mr Hosking.

“The argument isn’t about Facebook or Google – they’re absolutely fine. The argument is whether Australia wants to have any sort of innovative startups,” he said.

The tech companies most at risk of copyright lawsuits are two-way platforms, like Redbubble or Envato, that allow users to upload their own content which is then bought by other users.

These platforms are an area that Australia has particularly excelled in, with the creation of the ASX-listed Redbubble, Expert360 and LawPath. But the lack of safe harbour rules may lead the country to lose many of these companies, Mr Hosking said.

“To keep the companies in Australia we need laws that are in line with the rest of the OECD. There’s a risk for any company relying on digital content in Australia,” he said.

Speaking in Parliament, Mr Husic said the copyright bill is indicative of the government’s broader failure to deliver on its innovation promises.

“The failure of the Turnbull government to deliver on this shows that they are all talk on innovation but they are not there when needed.

“The Turnbull government has refused to be there on the big policy issues for all those companies in StartupAus. Their national science and innovation agenda is collapsing on itself like a deflated balloon,” Mr Husic said.

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